Posted
by
kdawson
on Tuesday October 27, 2009 @10:52PM
from the and-a-dinosaur dept.

robotsrule writes "This article contains notes from a 1-hour phone call with Ugobe founder Derek Dotson, now CEO of Innvo Labs Corporation, the company that acquired the rights to Pleo at the recent bankruptcy auction. Dotson reveals the hidden story behind Pleo's rise, fall, and resurrection including intriguing facts about the money trail and what he feels caused Ugobe to fail, including how he had to save Pleo's future on more than one occasion. He also lays out in plain detail Innvo Labs's strategy to help owners of older Pleos and those whose units were swallowed up by Ugobe's bankruptcy." We've been following the Pleosaga for years.

One is that you think that the other guy failed because he was doing it wrong, not because the idea is fundamentally doomed. You think that the product could have a life.

The second, and potentially more significant, is that the product was in fact doomed; but, because of the bankruptcy process, isn't doomed anymore. In a lot of cases, startup/R&D/tooling/whatever costs too much for the product to ever be economically sensible(nobody will buy at the price needed to pay per-unit costs and recoup your initial costs). However, if you go bankrupt, your creditors eat your startup costs and your assets get sold, typically for a fraction of what you paid to build them. If you don't have to recoup the startup costs, because you bought the infrastructure at a fire sale, you can actually make money.

The story of Iridium is probably the most dramatic example. The Iridium satellite constellation cost a fucking fortune to put into orbit. Even if execution had gone perfectly, prices would have been nutty. When the original outfit folded, the constellation was sold for peanuts, and was suddenly far more viable. Pleo isn't nearly that dramatic, I suspect; but it could easily be the case that, while Pleo would never be able to sell enough units at a high enough price to repay its development and tooling costs, it would be viable to keep pumping out units of the existing model.